Analysis

Four reasons why paper maintains its grip on international trade

AIR cargo is not the only industry grappling with digitising its outmoded processes. International trade is another sector still drowning in paper, according to the World Trade Organisation (WTO).

Both industries share similar hindrances to the wholehearted embracing of technological transformation, such as the complexity of overlapping global operations and the vast number of businesses, organisations and government agencies involved in various networks and supply chains, writes Thelma Etim.

International trade transactions involve a multitude of actors that continue to rely extensively on paper, just like the myriad of components involved in the airfreight industry, ranging from freight forwarders, ground handlers, second- and third-party logistics companies, as well airlines, airports and national Customs agencies.

International trade: A Maersk shipment took 34 days to go from the farm to the retailers, including 10 days waiting for documents

In 2014, shipping company Maersk tracked a refrigerated container filled with shipments of roses and avocados from Kenya to the Netherlands, to document the maze of physical processes and paperwork that affects every shipment.

The company discovered about 30 actors – and more than 100 people were involved throughout the journey – with the number of interactions exceeding 200, notes a WTO report.

The shipment took about 34 days to go from the farm to the retailers, including 10 days waiting for documents. One of the critical documents went missing, only to be found later amid a pile of papers.

A multitude of documents have to be submitted in the context of international trade transactions which fall into four main categories. They include:

1) Documents related to the commercial transaction itself, including the sales contract, commercial invoices and, if needed, a packing list submitted by the exporter prior to exportation;

2) Documents related to trade financing, such as letters of credit;

3) Transport documents, including bills of lading and airwaybills etc.; and

4) Documents for border procedures, including certificates of origin sometimes provided by chambers of commerce, but also other bodies such as government ministries or Customs authorities may also have this privilege in certain countries; sanitary and phytosanitary certificates, in the case of food, plant and agricultural products, which are usually delivered by the ministries of health and agriculture; certificates of conformity that certify that a product or service meets the specific requirements of a particular standard in the country of importation; export or import licences, if required by the authorities of the exporter’s or importer’s country; Customs declarations; and, finally, Customs inspection documents.